Adrián Sánchez, Director, Financial Crime & Compliance, LexisNexis Risk Solutions | 29 November 2021
Drug and human trafficking and illegal arms trading typically come to mind when we hear about global money laundering and its association to transnational organized crime. According to the World Bank, wildlife crime is the fourth most lucrative illegal business after narcotics, human trafficking and weapons.
Wildlife trading refers to the commerce of products that are derived from non-domesticated animals or plants usually extracted from their natural environment or raised under controlled conditions – these include living or dead animals or flora. Criminals trade in wildlife to achieve enormous financial gains through legitimate and illegal global supply chains, from poaching and transportation to processing and sale of both protected and non-protected species.
According to Financial Action Task Force (FATF), wildlife trade fuels corruption, promotes complex fraud and tax evasion, threatens biodiversity and has a significant negative impact on public health and the global economy. INTERPOL and the UN estimate that the illegal wildlife trade is a staggering US$20 billion annually.
While legal wildlife trade is regulated by the United Nations‘ Convention on International Trade in Endangered Species of Wild Fauna and Flora, arrests and convictions for illegal wildlife trafficking globally are rare.
Why should we stop wildlife trafficking globally? The answer is both societal and conservational.
Biological Threat
Zoonotic diseases are derived from viruses, bacteria and other pathogens that are transmitted between animals and humans. The Centers for Disease Control warns that illegal wildlife trafficking is a catalyst for human viruses, with 60% of infectious diseases in people classified as zoonotic. These include COVID 19, Ebola, MERS and SARS.
A 2020 FATF report warns that “the propagation of zoonotic diseases in the last few years underscores the importance of ensuring that wildlife products are marketed legally, safely and sustainably.” This is because when humans come into contact with these diseases, we are more likely to catch the viruses, transmit them to others and develop harder to fight viral mutations, such as the case with the Delta variant of COVID 19.
Conservation Threat
Entire species are changing or dying off due to criminals running illegal wildlife trades, enabling a serious conservation problem with negative effects on the viability of many wildlife populations and serving as one of the major threats to the survival of several vertebrate species.
A recent article in the NewScientist noted that female elephants in Mozambique rapidly evolved to become tuskless because of intense ivory poaching during the country’s civil war. One of the mutations involved kills male offspring. The same is happening in Sri Lanka where less than five percent of male Asian elephants still have tusks.
For decades, poachers targeted the white rhino for its horn, which were poached to give as impressive gifts or traded based on cultural myths that horns have medicinal properties. As a result, only two known white rhinos remain today, both female, which makes the white rhino extinct.
Governments and Businesses are Acting
To trade wildlife illegally costs money – like any business venture, criminals need to spend money to make money. Stopping the flow of financial transactions associated with wildlife trafficking naturally impedes these crimes to a great extent. This means businesses need to have greater visibility into the transactions and trade occurring within their environments.
The good news is that international organizations and governments are increasing the demand for greater regulatory compliance to prevent wildlife trafficking. The UN General Assembly, for example, is recommending a resolution urging countries to modify their national legislation so that financial institutions recognize crimes related to the illegal trade in wild fauna and flora as predicate offenses of money laundering.
Public policy and best practice trends spurred by national authorities include:
- Risk analysis. FATF recommends that authorities require relevant financial and non-financial institutions to identify and assess their exposure to money laundering risks related to illegal wildlife trade and to take appropriate mitigation measures.
- Customer profiles. Both FATF and INTERPOL are pressuring regulating bodies to add to watchlists individuals or companies with any association with wildlife trafficking.
- PEPs. FATF suggests that any officials involved with the protection and conservation of wildlife, hunting, fishing and forestry activities in addition to border, customs and collection personnel classify as politically exposed persons (PEPs).
Because of emerging wildlife and general AML regulations and oversight, financial and non-financial organizations and companies engaged in logistics and international trade – in addition to customs, tax and wildlife protection authorities – are under exceeding pressure to take a hard look at how they can play a part in stopping illegal wildlife trading.
What Can Companies Do to Help?
Financial transactions related to wildlife trafficking are difficult to detect because traffickers hide payments and activities within the global economy. Many wildlife trafficking supply chains are supported by cash until transportation and shipping come into play, further complicating risk visibility.
The answer to how companies can help stop illegal wildlife trading is both simple and intricate: Simple in that companies should fully understand who they are doing business with, both the people as individuals and the companies for which they work, then identify suspicious transactions and stop money laundering. It’s intricate because to do this, companies require exceptional insights and tools.
The good news is that spotting illicit activity has become easier with the help of thorough data and intelligent technology. For example, business can use technology to set certain red flag parameters. When payments above a certain threshold occur, accurate data and the technology used for Know Your Customer (KYC) and anti-money laundering (AML) can raise an alert for further human investigation. These tools can also detect suspicious patterns at the point they begin to form.
Technologies can help ease the burden of KYC and AML activities since they work behind the scenes all day, every day to isolate suspicious behavior and transaction anomalies. Digital identity intelligence produces real-time relevant data about the device, location and transactional behaviors, while artificial intelligence and machine learning provide a more accurate view of business transactions, behaviors and relationships.
These technologies can evaluate payments on all types of platformsand cross-check them with up-to-date data, particularly if individuals or businesses initiate a new form of payment to carry out commercial transactions that go beyond traditional financial systems. Technology can also continuously monitor transaction activity against current sanctions and watchlists and constantly evaluate new intelligence on adverse news in the media, utilizing the data companies already have on those they conduct business with and cross referencing it with public information. In the end this lessens false positives.
It Stops at the Beginning
Companies must make a public, active and continuous commitment in the battle against wildlife trafficking. Only a united effort globally can stop an illegal activity that has long-term societal and conservation impacts.
Although it’s a global problem, the first steps to curb this type of trafficking starts on the business level. Businesses can play a significant role by monitoring trade activities, fully understanding who is transacting in their environments and taking initiative to identify money laundering before it happens. Only then will the world make tremendous strides in creating substantial financial roadblocks for these criminals, thereby inhibiting illegal wildlife trafficking altogether.
Adrian is responsible of delivering the latest in technology for specialized solutions in anti-money laundering, sanctions compliance and anti-bribery and corruption.
He has a degree in Business Administration, has over 19 years of professional experience and is CAMS certified. Before joining LexisNexis Risk Solutions, he worked in different financial institutions, multinational companies, as well as in the government sector in different areas such as fraud prevention, prevention of money laundering and regulatory compliance, and developing strategies for prevention and detection of financial crimes.
